Newbie Investor/Doctor Seeking Advice on a Deal

June 08, 2025

by an investor from University of Utah in Salt Lake City, Utah, USA

Newbie here looking for general guidance: I am a physician with some expertise/interest in wellness and functional medicine. I was offered a position as a Chief Medical Officer with a startup providing functional health and wellness options for clients. The existing sister company was recently valued at $50 million. The offer to join as CMO is a 1% equity stake in the company with a buy in of $150k (0.25%), sweat equity (0.25% with approx 20+ hrs per month expected), and future options (0.5% exercisable at a $50 million valuation, contingent upon the venture achieving a $500 million valuation or higher). The equity in the sister company is transferable to the startup. For reference, a comparable business that is new was recently valued at $2.5B. Also, there is no pay at this time as the startup is yet to launch. Questions: Is 1% low for an important piece to their puzzle? Health is key to their offering and that’s my area of expertise. It seems like I’m being treated as an investor (buy in and future options) as well as a founder (no pay for work). Is that normal/reasonable? Am I stupid for even asking these questions for a company with this much potential and I should just take what they offered and run with it?

Reply by a searcher
from Columbia University in Fairfax, VA, USA

Not stupid questions at all, you're right to question them. There's a lot to unpack here (too much to post, so feel free to DM me - happy to chat more live). At startups, equity is typically issued as options (ISOs or NSOs) with 4-year vesting. You’ll pay to exercise them at some point, but you’re not expected to buy into the cap table as a working team member (especially pre-launch). Even for co-founders, it's rare to see a mix of buy-in capital, unpaid labor, and low equity. You're absorbing investor-level risk without founder-level ownership. Without knowing cap table details or how essential your role is to launch/compliance, this structure feels heavily skewed in the company's favor.

Reply by an intermediary
from Massachusetts Institute of Technology in Houston, TX, USA

This seems very unusual, and it's unclear to me what is going on with the "sister company" and how this relates, or doesn't relate, to your equity in the startup. Agreed with the others that there's tons to unpack here and a lot more information needed to make an informed decision, but I agree with the other commenters that asking a critical early-stage hire to also invest, while only providing 0.75% employment-based equity (usually it's all options....so 0.25% being an equity grant is weird, and will likely incur tax burden for you upon granting) is very weird and possibly concerning, depending on the details. It seems overly complex. I would think you should also be getting more % with a C-level title. Also, no salary at all? If they're suggesting this venture is currently at a $50M valuation, they should have raised money by now and have funds to pay employees. Something just overall feels off here, but maybe there's critical info that is unknown to outsiders that would fill in the gaps. Finally, I would put the comparable $2.5B company out of your head. Assume your equity will be worth zero so you won't be disappointed. Most startups fail.

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